In the coming weeks, Nifty50 may move towards 16000/16200 levels while immediate support is intact at 15450 levels, Sumeet Bagadia, Executive Director at Choice Broking said in an interview with Moneycontrol’s Kshitij Anand. Edited excerpts:
Q) What a week for Indian markets? The US Fed hawkish stance rocked the boat of bulls at least for now. What led to the price action on D-Street?
A) Indian market remained under pressure during the week while losses remained modest below 1 percent due to a strong first two sessions.
Sentiments got a hit after the US Fed unexpectedly signaled two possible hikes in 2023. Following the announcement, the US Dollar index rose, and investors are concerned that a sustained rise in the dollar can lead to a reversal of foreign portfolio flows from emerging equity markets to developed markets.
Q) India Inc is showing signs of recovery, and with unlocking in many states we could be heading for full recovery in the next few quarters. In case we do get a dip – what is a healthy dip which investors should not be worried about?
A) The impact of the second Covid wave is expected to remain restrained because of localised lockdown instead of complete national lockdown.
As a result, companies’ performances are likely to be less impacted. As the states are gradually implementing the unlocking process, a strong recovery in economic activity is expected in the next few quarters.
We advise investors to invest in quality businesses and utilise market correction, if it happens, as an opportunity to accumulate quality stocks for wealth creation.
Q) Do you think we have made a top in the Nifty50 and chances of more consolidation is much higher than a steady uptrend? What are the levels which one should watch out for?
A) Overall, the Nifty50 index performed well in the last couple of weeks as we witnessed a continued bullish trend with new records high, but during the week the market remained under pressure as the US Fed decesion on possible rate hikes weighed on investors’ sentiments.
Although, losses were modest, and we observed a one-way recovery in the index after it made a low of 15450.90 on the Friday session.
On the technical chart, the Nifty index is still looking bullish for the long term as it has formed a Hammer candlestick pattern on the daily chart, which indicates a further upward move in the counter.
Moreover, the index has also tested good support at its prior level of 15431 and bounced back further, which suggests buying strength in the near term.
In the coming weeks, the Nifty50 may move towards the level of 16000/16200 levels while immediate support is intact at 15450 levels.
Q) What is your call on the broader market space? Do you see small & midcaps to underperform and with cheap money slowly receding – time of easy money making in small & midcaps is behind us?
A) The US Fed decision of possible rate hikes weighed on investors’ sentiments. If the flow of cheap money recedes, it would definitely impact FPIs inflow, though the impact is somehow offset by increasing participation of domestic investors.
Further, liquidity conditions may also remain at a pleasing level in the near term with the US central bank announced to continue with its monthly $120 billion bond-buying program.
Q) What led to the price action on the sectoral front?
A) On the sectoral front, the FMCG sector has been on its rally giving a weekly breakout, and it has also been above the 50-day Moving Average.
The RSI indicator is also indicating an upside direction, which indicates a further north side move in the short term. The index is also trading above the Super trend, which indicates a strong bull trend.
For the upcoming week, the FMCG index could be a good performer as all the sectoral stocks like HUL, D-Mart, Britannia, Marico are looking more attractive on the chart. Hence, the index may test the new heights towards the level of 37000/37300.
Q) Any 3-5 trading ideas for the next 3-5 weeks?
A) Here is a list of the top three trading ideas for the short term:
Bajaj Auto: Buy| LTP: Rs 4164| Target: Rs 4350-4400| Stop Loss: Rs 4000| Upside 4%
On the weekly chart, the stock has formed a Hammer Candlestick with the support of its Horizontal Trend line as well as 50% retracement level of its previous up move, which can be considered a Bullish Reversal formation and indicates an upside movement in the counter.
On an hourly chart, the true strength indicator has given a positive crossover on the upside where it is indicating good strength for the stock to have a movement on the upside.
On the daily chart, the stock has been trading with a positive crossover of 100, and 50 Daily Moving Average which can be considered a Bullish Crossover which shows a Bullish movement in the counter.
Avenue Supermarts: Buy| LTP: Rs 3317| Target: Rs 3600-3700| Stop Loss: Rs 3120| Upside 8%
On the monthly chart, the stock has given a breakout of its previous resistance levels with volume activity which suggests strength in the counter for the upside.
Moreover, the stock has given a breakout of the rising trendline and sustained above the same can show strength in the counter.
On the daily chart, the stock has tested the horizontal line and bounced after making Doji Candle, which further adds strength.
Momentum indicator Stochastic, K% is trading above D%, which points out strength in the counter. On a daily chart, the stock has been trading above all the Moving Average, which indicates a bull run in the coming days.
HDFC Life Insurance: Buy| LTP: Rs 709| Target: Rs 760-800| Stop Loss: Rs 670| Upside 7%
On the monthly chart, the stock has been trading in a pennant formation which points out a bullish trend in the counter. Also, the stock has given a breakout of the Falling wedge formation, which suggests a reversal move in the counter.
Moreover, the stock has confirmed the bullish engulfing candlestick pattern which suggests a bullish move in the counter.
Furthermore, the stock has also sustained above Upper Bollinger Band formation and 100-Days Moving Averages, which point to a bullish rally in the upcoming month.
A momentum indicator RSI & MACD is also supportive with a positive crossover that shows bullish strength in the stock.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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